UK: Law At Work Hot Topics - December 2016

Last Updated: 9 January 2017
Article by Taylor Wessing

Gender pay information draft Regulations published

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 ("Regulations"), although still subject to Parliamentary approval, are due to come into force on 6 April 2017. Key features of the Regulations are that:

  • they will apply to private and voluntary sector employers with 250 or more employees on the relevant date;
  • "employees" include workers but not partners, including those in an LLP. Wording about ordinarily working in Great Britain has gone;
  • a "snapshot date" is 5 April in each year;
  • employers will be required to publish overall gender pay gap figures between men and women, being: mean average gender gap, median gender pay gap, mean gender bonus gap, median gender bonus gap (new), proportion of men and women getting a bonus; and proportion of men and women in each of four pay quartiles;
  • only those "full-pay" relevant employees should be included (not those on a reduced pay rate or nil pay during the snapshot period);
  • the relevant employer must report the pay data within 12 months beginning with the snapshot date. The last date for reporting the first set of gender pay gap statistics will be 4 April 2018;
  • The report must be accompanied by a written statement confirming that the information is accurate and signed by a director or LLP member;
  • the pay data and statement must be published on the employer's website, be available to the public and remain accessible for at least 3 years;
  • the employer must upload the information to a government website and the name and job title of the person who signed the written statement;
  • the Government must review the regulations within five years of commencement (so by April 2021) and report on them and at least every five years thereafter;
  • there is no express enforcement mechanism but a failure to comply will constitute an 'unlawful act' within the meaning of S.34 of the Equality Act 2006; and
  • a draft Explanatory Memorandum states that supporting non-statutory guidance will be published after Parliament has approved the Regulations.

Green Paper on Corporate Governance Reform

Back in the summer Theresa May raised the issue of workers sitting on boards during her leadership campaign and reiterated her commitment during her Conservative Party conference speech. Since then she has backpedalled somewhat from this following concerns from business leaders including the CBI and the Institute of Directors that the procedure could be unworkable in UK companies (as opposed to other European jurisdictions such as Germany), and it is now only one of three options in the Green Paper for strengthening stakeholder voice at boardroom level. The Government has now published its Green Paper on Corporate Governance Reform. This is a discussion paper from which the Government can consider whether changes are appropriate at this time, and if so whether by regulation or, as it suggests, by means of non-legislative standards adopted by business itself. Responses are required by 17 February 2017.

The stated aim of the Green Paper is to consider what changes might be appropriate in the corporate governance regime to help ensure that the economy works for everyone. It considers three specific aspects of corporate governance on which it believes there could be scope to build on and enhance the current framework:

  • Options for increasing shareholder influence over ensuring executive pay in quoted companies is aligned to long-term performance;
  • Giving greater voice to employees and consumers in the boardroom and what measures can be taken to increase the connection between boardroom directors and other interested groups such as employees and small suppliers; and
  • Considering whether features of governance standards for listed companies should be extended to the largest privately-held companies.

In its executive summary the Green Paper notes that this is part of a wider work to enhance public trust in business as a force for good. This includes Matthew Taylor's review of employment practices in the modern economy which has just been launched, the work to increase gender diversity in the boardroom and in senior management, and work to consider how to improve ethnic diversity. All of this has relevance to the challenge of connecting boards effectively with their workforce and customer base. While strengthening shareholder influence over executive pay remains limited to listed companies, the government is seeking views on applying enhanced standards of corporate governance more widely e.g. to large private companies. This is because while corporate governance and reporting standards are focussed on public companies where the owners or shareholders are distant from the executives running the company, large companies or LLPs with 1000 employees or more are not expected or required to meet these standards. Yet when things go wrong it can be equally severe for other stakeholders. In terms of the scope and size of business to which this corporate governance could apply, reference is made to the £36m turnover required under the Modern Slavery Act for disclosing steps taking in their own business and supply chains, and the gender pay gap reporting requirements which will apply to employers with 250 employees or more.

Employee prosecuted for unlawfully accessing personal data

The Information Commissioner's Office (responsible for the enforcement of UK data protection law) has successfully prosecuted a former employee of Lex Autolease Ltd for unlawfully accessing the personal data of 551 Lex customers under section 55 of the Data Protection Act 1998. The employee had emailed the data to himself and then sold it on. The defendant pleaded guilty and was fined £500 plus costs and a victim surcharge.

Rise in statutory pay rates from April 2017

The government has announced that, from 2 April 2017, the rate of statutory maternity, paternity, adoption and shared parental pay will rise from £139.58 (or 90% of the employee's average weekly earnings if this figure is less than the statutory rate) to £140.98 per week.

Statutory sick pay will increase from £88.45 to £89.35 per week, with the rise expected to take effect on 6 April 2017.

There was no increase in April 2016 so these will be the first rises in these rates since 5 April 2015.

Consultation begins on reform of employment tribunals

The Ministry of Justice and the Department for Business, Energy & Industrial Strategy have jointly published a consultation document on reform of the Employment Tribunals and the Employment Appeal Tribunal. The changes include:

  • Digitising the whole process to allow greater use of electronic communication;
  • Delegating procedural decisions and routine tasks from judges to caseworkers, freeing up judges to focus on matters where legal expertise and knowledge is needed;
  • Tailoring the composition of tribunal panels according to members' expertise and the needs of the case; and
  • Removing any unnecessary restrictions on how a particular type of case must be determined.

The consultation closes at 12.00am on 21 January 2017 and you can respond online here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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